Lao PDR. Project for Establishing Public Investment Plan under NSEDP (PCAP3)

Transcription

1 Lao People s Democratic Republic Ministry of Planning and Investment Lao PDR Project for Establishing Public Investment Plan under NSEDP (PCAP3) Mid-Term Progress Report (First Year) September 2012 Japan International Cooperation Agency IC Net Limited

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3 JICA Technical Cooperation Project for Establishing Public Investment Plan under NSEDP Mid-Term Progress Report (First Year) Abbreviations ADB AMP DPI DPO GoL JCC JICA MPI MPI-DIC MPI-DOE MPI-DOP NSEDP ODA PCAP1 PCAP2 PCAP3 PDM SEDP SPIS TOT UNDP Asian Development Bank Aid Management Platform (Provincial) Department for Planning and Investment District Planning Office Government of the Lao PDR Joint Coordinating Committee Japan International Cooperation Agency Ministry of Planning and Investment Department of International Cooperation Department of Evaluation, MPI Department of Planning, MPI National Socio-Economic Development Plan Official Development Assistance Project for Capacity Building in Public Investment Program Management Project for Enhancing Capacity in Public Investment Program Management Project for Establishing Public Investment Plan under NSEDP Project Design Matrix Socio-Economic Development Plan Simplified Project Information Sheet Training of Trainers United Nations Development Programme

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5 Contents 1. Project Background Background Activities of the First Year: Survey Results Outline of the Survey Survey Results and Indicators for PCAP Project Purpose Overall Goal Output Output Output Output Issues, Approaches, and Lessons Learned Utilizing Lessons Learned from the Survey Project Implementation Set-up Other Issues and Approaches to Address Them Activity Plans Output Output Output Output

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7 1. Project Background 1.1 Background Within the Lao People s Democratic Republic, the Ministry of Planning and Investment (MPI) is the organization with responsibility and authority in all matters related to the management and supervision of public investment projects. MPI verifies the appropriateness of projects in each field, and reviews the development budget for approval at the National Assembly. MPI is also assigned to regularly monitor and evaluate projects, and to report the results to the National Assembly. MPI lacks project management ability, however; so do the Department of Planning and Investment (DPI) in each province and the district-level District Planning Office (DPO), which are its local agencies. As such, public investment projects implemented using the domestic development budget are not carried out effectively. Furthermore, the degree to which these projects contribute to the achievement of the targets set out in the government s five-year National Socio-Economic Development Plan (NSEDP) is unclear, resulting in major discrepancies in planning and implementation. Given the situation, a Japan International Cooperation Agency (JICA) technical cooperation project was implemented between November 2004 and October 2007, entitled Project for Capacity Building in Public Investment Program Management (hereafter referred to as PCAP1), with the goal of ensuring that public investment projects led by the government of Laos (GoL) are assessed, monitored and evaluated appropriately. MPI acted as the counterpart organization for this project. Under PCAP1, management and supervision techniques, including project assessment tools and financial, environmental, and social analyses were developed and compiled as a manual, along with accompanying handbooks. A capacity-building model for MPI and DPI was also formulated, based on which a process of technology transfer and dissemination to various organizations was carried out, focusing primarily on MPI, three monitor provinces (Oudomxay, Khammuan, and Saravan), and a monitor ministry (the Ministry of Agriculture and Forestry). After PCAP1 was completed, another JICA technical cooperation project was carried out from March 2008 to August 2011, entitled Project for Enhancing Capacity in Public Investment Program Management (hereafter referred to as PCAP2). This project aimed to: (i) Achieve further improvements in the methods and tools developed through PCAP1 (preparing and managing budgets, sector programs, management and supervision of public investment projects implemented at the district level, and supervision of the counterpart fund 1 for the Official Development Assistance (ODA) projects); (ii) Disseminate the methods and tools developed through PCAP1, as listed above, throughout the provinces and to all central government organizations; and (iii) Provide support for the formulation of the Public Investment Law. A revised edition of the resulting manual, containing management methods and tools for public investment projects was compiled. This was an improved version of the manual formulated in PCAP1, and was involved in nationwide dissemination activities. Technical support was also provided to prepare for the Public Investment Law. PCAP1 and PCAP2 increasingly improved the capacity of MPI and DPI to manage public investment projects, by developing, revising, and disseminating methods and tools for assessing, monitoring, and 1 GoL covers part of the cost of ODA projects by using the domestic development budget. In PCAP2, formats and processes were developed to enable those with responsibility for projects on the Lao side to appropriately apply for budgets from this fund. 1

8 evaluating projects, as well as various forms for assessing projects. They also did so through training programs. The Public Investment Law was enacted in December 2009, prescribing the obligation to assess public investment projects, and positioning the methods and tools developed through PCAP1 and PCAP2 as national systems under the law. In assessing public investment projects, efforts must be made to ensure transparency and accountability in project selection. In order to do so, training regarding the methods and forms involved must be carried out with a wider range of central government organizations and provinces. In order to promote further improvements in public investment projects, it is necessary to manage public investment projects within the medium-term financial management planning framework and the NSEDP. As such, the further strengthening of the capacity of relevant organizations presents a challenge for the future. To address the abovementioned issues and utilize outputs from PCAP1 and PCAP2, a new technical cooperation scheme has been agreed upon, to be implemented within the period from March 2012 to September 2015, entitled Project for Establishing Public Investment Plan under NSEDP (hereafter referred to as PCAP3). In order to realize the primary objective of achieving sound project management that aligns with NSEDP targets, PCAP3 will develop methods and tools for public investment project management from a mid-term perspective, and further enhance the capacity of MPI, DPI and DPIO nationwide. More specifically, PCAP3 involves the following four approaches for achieving its primary objective: i) establish a mid-term public investment framework, ii) develop a process that ensures that project effects will be sustainable after the project completion, iii) improve the ODA project information management method, and iv) strengthen district-level public investment project management. 1.2 Initial Stages of Project Implementation PCAP3 started its first-year project activities in March The activities that have been implemented as of September 2012 are as follows: Table 1 Activity Plan and Results, March - September 2012 Activity Details Original/Revised Plan First 1 Formulating and discussing the Inception Report Inception Report 2 Holding Joint Coordinating Committee Meeting First JCC All 3 Formulating Progress Reports and Work Completion Reports on an annual basis, and Project Completion Report at the end of the project period Progress Report [Output 1] A framwwork for Mid-Term Public Investment Plan and Financial Management Guidelines established 1 Implementation of Survey, Selection of Pilot and Monitoring Organizations First Survey Year 2 Establishment of the draft Mid-term Public Investment Plan and Financial Management Guidelines [Output 2] Measures for effective operation and maintenance of public investment projects after its completion are established First 1 Discussions with the Ministry of Finance regarding the operation and maintenance costs after the completion of the public investment projects Survey Year 2 Establishment of methods and processes for the terminal and ex-post evaluations of public investment projects [Output 3] ODA project information management is improved First 1 Discussions with donors on standardization of ODA projects within the scope of public investment Survey Year 2 Establishment of an improvement process regarding ODA information management [Output 4] A mechanism of management and capacity development for district-level public investment projects is established 1 Discussions within the MPI and with relevant authorities on establishment and management of district-level public investment projects First Year 2 Implementation of a baseline study to select pilot and monitoring organizations Survey 3 Development of processes and training methods for establishment and management of district-level public investment projects in the pilot organizations 2

9 The initial stages of PCAP3 involved the compiling of the inception report, which was submitted to the JICA Laos Office. The first Joint Coordinating Committee (JCC) meeting was held on April 30 th, The following table outlines the meeting; Table 2 First JCC Meeting Outline [Date/Time] April 30 th, 2012, 2 pm 4pm [Chairperson] Dr. Khamlien Pholsena, Vice Minister, MPI / PCAP3 Project Director [Lao participants] [Location] 6 th floor Meeting Room, MPI Mr. Phoukhong Bannavong, Director General, Department of Evaluation, MPI / PCAP3 Project Manager Mr. Ouneheauane Chittaphong, Deputy Director General, Department of Planning, MPI / PCAP3 Project Co-Manager Mr. Houmphanh Soukprastih, Deputy Director General, Department of International Cooperation, MPI / PCAP3 Co- Manager [Japanese participants] Mr. Masato Iso, Governor, Embassy of Japan Mr. Masato Togawa, Chief Representative, JICA Laos Office Representatives from Embassy of Japan and JICA Laos Office PCAP3 Experts [Agenda] Time Agenda 13:30-14:00 Reception 14:00-14:10 Opening Remarks by Dr. Khamlien Pholsena, Vice Minister of MPI, Project Director of PCAP3 14:10-14:40 Presentation (1) Achievements from PCAP1 through to PCAP2 by Mr. Phoukhong Bannavong, Director General of MPI-DOE, Project Manager of PCAP3 14:40-15:00 Presentation (2) Outline of PCAP3 by Mr. Ichiro Okumura, Chief Advisor, PCAP3 15:00-15:10 Coffee Break 15:10-15:30 Presentation (3) Activity Plan for the First Year by Mr. Hiromi Osada, Deputy Chief Advisor of PCAP3 15:30-15:40 Q&A Session 15:40-15:50 Speech by Mr. Masato Togawa, Chief Representative of JICA Laos Office 15:50-16:00 Closing Remarks by Dr. Khamlien Pholsena - [Contents] Presentation (1) Achievement from PCAP1 through to PCAP2 explained the background of public investment management in Lao PDR, and the outputs and outcomes of the two technical cooperation projects. Presentation (2) Outline of PCAP3 described the status quo of public investment management before the project began, along with the new project design and plan of operation. Presentation (3) Activity Plan for the First Year gave information on the activity plan from March 2012 to June 2013, along with details on the baseline survey plan. Dr. Khamlien Pholsena, Vice Minister of MPI, shared his high hopes for the success of the new project, and suggested that the strengthening of district-level public investment management be emphasized, along with the new policy announced by the GoL. Mr. Masato Togawa, Chief Representative of JICA Laos Office explained that PCAP3 will follow PCAP1/PCAP2, but take new steps forward for further improved public investment management in Lao PDR. 3

10 2. Activities of the First Year: Survey Results 2.1 Outline of the Survey From March to September 2012, PCAP3 employed local consultants through a sub-contract to conduct a comprehensive baseline survey. The following is an outline of the baseline study. (1) Objectives The following three objectives were set for the baseline survey; 1) To collect and organize necessary basic information for PCAP3 activities. 2) To collect and organize baseline information for the PCAP3 Project Design Matrix (PDM). 3) To collect necessary information for selecting pilot and monitor organizations. (2) Scope The survey was conducted through the following six approaches: Component 1: Collect basic information on administrative organizations. Component 2: Gather information and data that can act as a reference in selecting pilots and monitoring provinces. Component 3: Gather information on the number of public investment projects managed at the district level. Component 4: Gather and analyze data related to the development budget. Component 5: Conduct survey of implementation of ex-post and terminal evaluation studies of public investment projects. Component 6: Conduct survey of budget and information management systems for ODA projects. (3) Methods The survey was conducted as follows; Collection and analysis of published information (i.e., websites, foreign aid reports, annual donor reports) Collection and analysis of documents published by GoL (i.e., laws, decrees, regulations, and statistics) Interviews Collection and analysis of public investment-related documents, collected from various organizations The survey team traveled to six provinces (Oudomxay, Luang Prabang, Bolikhamxay, Savanakhet, Champassak, and Saravan) and to Vientiane Capital, interviewing persons directly and indirectly involved with the development budget and with public investment project management. The team also visited seven central government offices, in order to better understand the current issues involved in public investment management. (4) Schedule According to the initial schedule, the final report was to be completed by the end of August. However, its completion has been delayed by approximately one month, and it is expected to be finished by the end of September. The major reason for the delay is the difficulty involved in collecting the necessary information from the requested organizations, which has triggered delays in analyses and the compilation of results for incorporation in the report. In terms of intermediate outputs, the interim report was submitted as scheduled, but the draft final report was delayed by one month. The following 4

11 chart explains the planned and actual progress of the survey: 2.2 Survey Results Activity Selection & Contract of consultants Preparation Works Collection of data & interview Data analysis & report compilation Inspection of report Submission of reports Site of Activity Vientiane Vientiane 7 sample provinces Ministries in Vientiane Vientiane Vientiane This section provides an outline of the survey results, which were as follows: (1) Achievement Level of Survey Objectives Through the completion of all six components, the three survey objectives: 1) collecting and organizing basic information for PCAP3 activities, 2) collecting and organizing baseline information for the PCAP3 Project Design Matrix (PDM), and 3) collecting information for selecting pilot and monitor organizations, were all successfully achieved, and the required analyses are due for completion in the final report. (2) Efficacy of PCAP3 The four outputs of PCAP3 were proven to be relevant through the baseline survey. The implementation decree for the Public Investment Law is now under discussion in government meetings, and is expected to be approved by the Prime Minister soon. The new decree will contribute to the institutionalization of the outputs expected from PCAP3, which are: the establishment of the Public Investment Plan, along with the Financial Management Guidelines (Output 1), the strengthening of public investment project output sustainability by promoting terminal and ex-post evaluation (Output 2), the promotion of more transparent ODA projects through information sharing (Output 3), and the development of district-level public investment project management (Output 4). Through the baseline survey, it was discovered that some preparations have already been made for resolving issues that PCAP3 aims to address. The processes and tools for public investment project management that were developed through PCAP1 and PCAP2 were found to be actively used, and it was confirmed that they continue to be required to strengthen practice. The following is a description of the survey results, by component: (3) Outline of Component 1 Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Working calendar Interim Report Draft Final report Final Report Basic information regarding government organizations at the central, provincial, and district levels was collected and analyzed. This information was needed to identify the existing level of capacity, as a basis for establishing a capacity development model. It included information on organizational charts, the number of officials in each organization, the legal framework involved in recruiting public servants, the annual government expenditure, and the development budget approval process March April May June July August Sep. Oct. 5

12 For the development plan formulation process, basic statistics and data were collected from sector offices and departments in districts and provinces that are vertically connected to the sector ministry. The sector ministry provided information that was shared with district and provincial planning organizations at their respective levels. Information was also submitted by each sector ministry to MPI, compiled at MPI, and incorporated into NSEDP targets. After the NSEDP is announced, guidelines for formulating provincial and district-level Socio- Economic Development Plan (SEDP) will be shared by MPI. At the same time, central government organizations will also be instructed to formulate their sector s SEDP. Therefore, it can be said that data collection is conducted bottom-up, while the formulation of development plans is conducted topdown. The following two figures indicate the flow of data (left), which generally moves upward, and the formulation of guidelines for the development plan (right), which generally flows downward. formulate NSEDP MPI compile Flow of data guidelines NSEDP MPI guidelines Flow of data guidelines For SEDP formulation Provincial Governor report DPI compile submit Same information submit Sector Ministry compile submit Provincial Sector compile Department guidelines Provincial Governor formulate Provincial SEDP DPI formulate Sector SEDP formulate Sector Ministry Provincial Sector Department District Governor report DPIO compile Same information submit submit District Sector Office District Governor formulate DPIO District SEDP Provincial sector plan District Sector Office Figure 1 Flow of data and instructions for NSEDP\SEDP formulation (4) Outline of Component 2 The survey team also collected and analyzed basic information that may be utilized for the selection of pilot and monitor organizations. The contents of this information include project assessments for all projects that have requested budgets, the presence of provincial sector strategies and matching public investment project lists, and the structure of the tax collection and revenue system. In the planning process of the survey, PCAP3 and MPI selected seven central government ministries and 7 provinces (and Capital) as candidates of the of pilot and monitor organizations. Among these, one ministry and one province will be selected as pilot, and two ministries and 2 provinces will be selected as monitor organizations respectively. Selection will be done through the abovementioned basic information, as well as the response and processes found at each organization during the Survey visit. One of the key criteria for determining how planning departments have corresponded to PCAP methods and tools is to compare the coverage of project assessment within the listed projects. The following charts show the assessment ratio of key government organizations and provinces respectively. 6

13 Table 3 Assessment Conducted at Selected Ministries, 2011/2012 Annual Development Budget Preraration MAF MICT MEM MPWT MOES MPH MICT Ministry 2 Project Project Assessment Projects Submission Assessment Document Assessment Ratio Listed Ratio Ratio (by list) Submitted Conducted (by submission) (a) (b) (b) / (a) (c) (c) / (a) (c) / (b) Source: Ministry Planning Department Survey Table 4 Assessment Conducted at Selected Provinces, 2011/2012Annual Development Budget Preparation Project Project Assessment Projects Submission Document Assessment ratio Province Listed Ratio (%) Submitted Conducted (by list) Assessment ratio (by submission) (a) (b) (b) / (a) (c) (c) / (a) (c) / (b) Oudomxay % % 82.7% Luang Prabang % % 50.9% Vientiane Capital % % 100% Savannakhet % % 100% Champassak % % 50.8% Saravan % % 97.4% Source: DPI Survey As for the current efforts for introducing new approaches such as mind-term planning, budget allocation and district-level public investment project management, Oudomxay Province was progressive in attempting to introduce theses approaches in their own style for the past two years, with the initiative of DPI through their own interpretation of the government direction. Oudomxay was found also progressive for both DPI and sector departments in understanding and actively utilizing current methods and tools of public investment management, ever since they were designated as オン one of the PCAP1 monitor organizations. (5) Outline of Component 3 At the Ninth Congress for Lao People s Revolutionary Party held in March 2011, Resolution Three was announced with the instructions to provide more authority to district levels in public investment project management. Some provinces have started shifting part of project responsibilities to districtlevels depending on its budget size and technical simplicity. However, since no specific methods or demarcation are officially announced, most provinces are acting based upon their understanding. Through this Survey, the numbers of projects that are shifted from provincial initiatives to districts, along with their processes were asked at study sites. The following chart explains the number of projects that are managed by districts. 2 MAF=Ministry of Agriculture and Forestry, MIC=Ministry of Industry and Trade, MEM=Ministry of Energy and Mining, MPWT=Ministry of Public Works and Transportation, MOES=Ministry of Education and Sports, MPH=Ministry of Public Health, MICT=Ministry of Information, Culture and Tourism 7

14 Table 5 Number of Public Investment Projects that are Managed by Districts (at Survey visited Provinces) Province/ Fiscal Year 2006/ / / / / /12 District Oudomxay Projects (35) 15(37) 16(34) 30(43) All projects (69) 51(74) 60(79) 111(126) District Luang Prabang Projects All projects District Bolikhamxay Projects All projects District Savannakhet Projects All projects District Saravan Projects (68) 16 n.a. (13) All projects 82(259) (91) District Champassak Projects All projects District Vientiane Capital Projects All projects *Numbers in asterisks ( ) show number of projects inclusive of Poverty Reduction Fund Source: Annual Development Budget Reports (MPI) and interviews with DPI at provinces After a series of interviews with provincial and district-level officials at study sites, the following approaches and issues were confirmed at each province. Province Comments related to shift of district-level public investment project management Oudomxay Shifting of some project management procedures to districts has started as early as 2005/06. Projects under 500 million Kip were first shifted. Budget allocation to districts was announced at the 2011/12 budget preparation. From 2011/12, projects with budget under 1 billion kip will be managed at the district level. However, project assessment, selection and disbursement are still done at the provincial level. There are plans to shift the disbursement for districts that are ready. However, although payment for recurrent expenses has started for some districts, no districts are yet to be allowed to disburse development budget. Some projects over 1 billion Kip will be shifted to district-level management based on the decision by the province. Luang Prabang After the resolution, some management procedures for 2011/12 projects that are under 1 billion Kip are shifted to districts. However, project assessment and selection are still conducted at DPI. In the past, ownership of projects at the district levels was not seen. Ownership will hopefully improve with the new approach. Bolikhamxay Even before the Resolution, Paxxan District have been assigned to manage technically simple projects. If they had any difficulties, the provincial levels were available for support. Savannakhet District sector offices are involved in co-management of projects within their own district. However, no management duties have been shift from province to DPO and District Finance Office. In 2010/11, there was an attempt to provide budget allocation to district levels, but did not work well. Although reporting from district-level to provincial-level is good, communication among district level sector are not functioning well. Although there are many discussions among the province and districts, the districts refuse to obtain project management authorities for lack of their own capacity. 8

15 Saravan Champassak Vientiane Capital Most of the projects among the 65 that are shifted from province to districts in fiscal 2011/12 was related to building construction (i.e. schools, hospitals and government building). Technically complicated projects such as road, bridge and irrigation are still managed at the provincial level. Thorough capacity development on technical issues and management basics to districtlevels is necessary. District is now able to plan, formulate and implement public investment projects of under 10 million Kip. Disbursement and assessment are still under the province. Recently, bidding procedures have been trailed by districts with the instruction of DPI. Projects with a budget over 1billion Kip and under 5 billion Kip is under responsibility of the district. 171 projects (with 33.5billion Kip) were shifted to district levels. On one hand, it was found out that Oudomxay and Saravan provinces, and Vientiane Capital have been shifting part of project management duties to district levels in their own terms, before the Resolution was announced. On the other hand, it was also found out that all provinces have somewhat insecurity in relying on district level for project management. (6) Outline of Component 4 The survey team collected and analyzed recent figures of the development budget and its debts. Forecast estimations of the total development budget during the Seventh NSEDP ( ) was also obtained. The following chart shows the results (2006/07 to 2009/10) and estimations (2010/11 and 2011/12) of the development budget classified by ODA and domestic funding; Table 6 Development Budget (by Domestic/ODA) 2006/07 to 2011/12 Ministries Million Kip 2006/ / / / / /12 Results Ratio Results Ratio vs. LY Results Ratio vs LY Results Ratio vs LY Plan Ratio vs LY Plan Ratio vs LY Domestic 305, % 374, % 122.5% 756, % 202.0% 1,190, % 157.5% 1,026, % 86.2% 1,374, % 133.9% ODA 1,970, % 2,280, % 115.7% 1,573, % 69.0% 4,696, % 298.4% 4,604, % 98.0% 5,251, % 114.1% Total 2,275, % 2,654, % 116.7% 2,330, % 87.8% 5,886, % 252.7% 5,630, % 95.6% 6,625, % 117.7% Provinces Domestic 236, % 313, % 132.5% 381, % 121.6% 526, % 138.1% 733, % 139.3% 826, % 112.5% ODA 876, % 673, % 76.9% 612, % 90.9% 0 0.0% 0.0% 495, % #DIV/0! 448, % 90.5% Total 1,113, % 987, % 88.7% 994, % 100.7% 526, % 53.0% 1,229, % 233.4% 1,274, % 103.7% Domestic Total ODA Total Grand Total 542, % 688, % 126.9% 1,137, % 165.4% 1,717, % 151.0% 1,760, % 102.5% 2,200, % 125.0% 2,846, % 2,954, % 103.8% 2,186, % 74.0% 4,696, % 214.8% 5,100, % 108.6% 5,700, % 111.8% 3,388, % 3,642, % 107.5% 3,324, % 91.3% 6,413, % 192.9% 6,860, % 107.0% 7,900, % 115.2% (Note: ODA results for 2009/10 was not classified among Ministries/Provinces, therefore reflected all in Ministries) Source: Ministry of Finance Gazette of State Budget, 2006/07 to 2011/12 It can be seen that the development budget continues to rely heavily on ODA. The ratio of ODA within the total budget in 2007/08 was 84%, and reduced to 72% in 2011/12. However, the actual amount within these this period has doubled. In 2008/09, the amount of ODA has seen a sudden drop to 74% compared to its previous year. It is estimated that the world economic crisis in 2007 had somewhat effect to the development partners contribution of that year, with the intention of recovering its reduced amount in 2009/10. With the intention to refill the decrease, GoL also has drastically increased the domestic funding for 2008/09 and 2009/10. The following chart shows the same figures categorized by ministries and provinces 9

16 Table 7 Development Budget (by Ministries/ODA) 2006/07 to 2011/12 Million Kip 2006/ / / / / /12 Results Ratio Results Ratio vs. LY Results Ratio vs LY Results Ratio vs LY Plan Ratio vs LY Plan Ratio vs LY Domestic Ministries 305, % 374, % 122.5% 756, % 202.0% 1,190, % 157.5% 1,026, % 86.2% 1,374, % 133.9% Provinces 236, % 313, % 132.5% 381, % 121.6% 526, % 138.1% 733, % 139.3% 826, % 112.5% Total 542, % 688, % 126.9% 1,137, % 165.4% 1,717, % 151.0% 1,760, % 102.5% 2,200, % 125.0% ODA 中央省庁 1,970, % 2,280, % 115.7% 1,573, % 69.0% 4,696, % 298.4% 4,604, % 98.0% 5,251, % 114.1% 県 876, % 673, % 76.9% 612, % 90.9% 0 0.0% 0.0% 495, % #DIV/0! 448, % 90.5% Total 2,846, % 2,954, % 103.8% 2,186, % 74.0% 4,696, % 214.8% 5,100, % 108.6% 5,700, % 111.8% Ministries Provinces Grand Total 2,275, % 2,654, % 116.7% 2,330, % 87.8% 5,886, % 252.7% 5,630, % 95.6% 6,625, % 117.7% 1,113, % 987, % 88.7% 994, % 100.7% 526, % 53.0% 1,229, % 233.4% 1,274, % 103.7% 3,388, % 3,642, % 107.5% 3,324, % 91.3% 6,413, % 192.9% 6,860, % 107.0% 7,900, % 115.2% (Note: ODA results for 2009/10 was not classified among Ministries/Provinces, therefore reflected all in Ministries) Source: Ministry of Finance Gazette of State Budget, 2006/07 to 2011/12 Recent budget distribution trend shows that central government organizations (ministries) have large allocation for both domestic funding and ODA. It was known that ODA tends to be managed by ministries, but it is surprising to see that over 60% of the domestic budget for 2011/12 is allocated there, due to many mega and priority projects being implemented recently. (7) Outline of Component 5 Information related to the current implementation status of terminal and ex-post evaluations was collected and analyzed. It was confirmed that all ODA projects have been conducting terminal evaluations or equivalent studies within the procedure determined by each development partner. With regard to ex-post evaluation, the World Bank and Asia Development Bank (ADB) will conduct periodical studies for randomly-chosen projects, and JICA will conduct studies for all projects that cost in excess of 200 million yen. Terminal and ex-post evaluation in Lao PDR has not yet been conducted in a systematic manner, since the relevant procedures and tools are yet to be developed. Quality inspection for completed infrastructure projects is carried out, but cannot be categorized as evaluation. MPI has recently established a procedure for the regular assessment of new and ongoing projects. However, the objective of these assessments is to provide reference for the justification of annual budget allocations to each project. By introducing the terminal evaluation procedure, a total plan-dosee procedure in the project cycle will be completed, including practical and physical evaluation feedback on sustainability after completion, apart from development budget allocation. Most infrastructure projects, after their completion and operation, submit a request that maintenance costs be covered for damages that have been found, and these requests are typically considered to represent new public investment rehabilitation projects. Ideally, constant, regular, and emergency maintenance should be considered separately, along with the budget allocation for each project. Therefore, in considering methods and tools needed for output 2, as listed above, economic operation and maintenance concepts and budget allocation efforts including preventive conservation will be incorporated. (8) Outline of Component 6 The Simplified Project Information Sheet (SPIS), developed by PCAP2, is now being used as the standard format for requesting national contributions to budgets for ODA projects. At the same time, 10

17 the Department of International Cooperation of MPI (MPI-DIC) is attempting to collect ODA project information from DPI through different formats. However, since the project information required resembles information collected through development partners through the Aid Management Platform (AMP), MPI-DIC s approach is expected to be integrated with SPIS. Since accurate ODA project information is required for Lao project owners who request a national contribution budget through SPIS, it is necessary to consider how to share project information within the AMP system. Currently, this information is only shared among development partners and Lao government officials. 100% 90% 80% 70% 60% 50% 40% 94%=16 94%=16 88%=15 88%=15 88%=15 88%=15 82%=14 76%=13 An observation of internet access situations at the provincial level found that 16 out of 17 provincial DPIs have computers that can gain access, as do 76% to 94% of provincial sector departments. 30% 20% 10% 0% DPI PAFO DPWT DOF DOES DOH DOIC DICT Figure 2 Internet Access Situations in Provincial Departments 11

18 3. and Indicators for PCAP3 The baseline survey studied the baseline and target indicators for PCAP3. The following subchapters describe the draft indicators that will be included in the PCAP3 PDM. These indicators will be proposed for approval in the second JCC meeting. 3.1 Project Purpose Five indicators have been chosen for assessing the Project Purpose, or The Ministry of Planning and Investment and its subordinate organizations in the provinces (DPI) and districts (DPO) manage public investment projects based on the mid-term public investment plan. The following charts describe these indicators, indicating their baselines and targets, listing reasons for their creation, and sharing any relevant remarks. [Indicator 1] A guideline to draft Mid-Term Public Investment Plan that is related to the next NSEDP is officially announced from the Ministry of Planning and Investment to ministries, government organizations, provinces and districts. There are some indications that central government and provincial organizations will be instructed to create lists of public investment projects that must be implemented in order to achieve SEDP targets. However, no budget guidelines are provided. The MPI instructs government organizations about the formulation of a public investment plan that incorporates the following aspects: A mid-term budget allocation is indicated to each organization. The allocation of sectors is made clear or suggested. Specific instructions on the reduction of debt are given. MPI has already instructed government organizations to formulate SEDPs and lists of public investment projects that must be implemented in order to achieve its targets. However, its instructions were announced without budget allocations, meaning that the lists of projects had no financial basis for full implementation. The main objective of public investment plan formulation is to ensure that there are enough financial resources for the implementation of plans. MPI and the Ministry of Finance need to provide directions for the reduction of development budget debt. Therefore, specific instructions for reducing debt in government organizations must be incorporated into the formulation guidelines of the public investment plan. [Indicator 2] Terminal evaluation studies for completed public investment projects are conducted. The percentage of terminal evaluation studies conducted The percentage of terminal evaluation studies conducted for domestic budget public investment projects is 0%. for the domestic budget public investment projects All of the ODA projects of the top three development selected by the planning departments of implementing partners, determined by amount of assistance with agencies is 100%. infrastructure projects in Lao PDR, have completed The terminal evaluation target for all projects will be set terminal evaluations or relevant studies. up when the total number of projects has been determined. 12

19 The bases of these targets are as follows: Terminal evaluations must be conducted for domestic budget public investment projects nearing their completion. The goal for implemented terminal evaluations is 100% of all completed projects. The number of projects to be evaluated in the first year will be determined by the capabilities of DPI and the ministry planning departments, since it is feared that it will be difficult to cope with all of the projects without an adjustment of the organizational structure involved. The numbers will be determined throughout the training sessions. The process for achieving this indicator involves i) the inclusion of a decision process for determining which projects will conduct terminal evaluations, ii) consistency with other evaluation and assessment methods, tools, and processes developed through the PCAP series, iii) the development and dissemination of a basic terminal evaluation method that allows evaluators to be put into practice, and iv) the inclusion of operation, maintenance, and repairing budget plans in the evaluation criteria. The bases of these process aspects are as follows; The objectives of the terminal evaluations are i) to strengthen the consistency of the project management cycle, from ex-ante evaluation to ex-post evaluation, and, ii) to secure operation and maintenance fees after the completion of infrastructure projects. Therefore, projects nearing completion are considered to be subjects for terminal evaluation. For some domestically-funded public investment projects, construction is completed but payment is incomplete. The objective of terminal evaluation is to involve projects that are physically complete. As such, the aforementioned projects are also subject to evaluation. For ODA projects, terminal evaluation or other relevant studies must involve their own procedures and methods. Since uniform procedures for domestic budget public investment projects have not been prepared, systematic terminal evaluations will not be conducted on a regular basis. The implementation decree for the Public Investment Law will soon be enforced. Instructions for conducting terminal evaluations will be institutionalized through this decree. [Indicator 3] Post evaluation studies of completed public investment projects are conducted. The percentage of ex-post evaluation studies for domestic budget public investment projects that have 100% of the domestic budget public investment projects selected by DPI and the planning departments of been conducted is 0%. implementing agencies have conducted ex-post For the top three development partners, determined by evaluations. amount of assistance with infrastructure projects in Lao PDR, all ODA projects have conducted ex-post evaluations or relevant studies. s for the ex-post evaluation of all projects will be set up when the total number of projects has been determined. The basis of these targets are as follows: Ex-post evaluation is conducted for domestic budget public investment projects that have been completed for less than three years. The goal for implementing terminal evaluations is 100% of all completed projects. The number of projects to be evaluated in the first year will be determined by the capabilities of DPI and the ministry planning departments, since it is feared that it will be difficult to cope will all projects without adjusting the organizational structure involved. The numbers will be determined throughout the training sessions. 13

20 [Indicator 4] Accuracy of information is confirmed through ODA counterpart fund request documents that the Lao side supplies, and the information is shared with the donor projects. Currently, AMP is not connected to Lao government Lao Government organizations share up-to-date ODA organizations, and so ODA project information is not project information provided by AMP. shared. The number of submitted SPIS formats with incomplete Among 14 provinces and 5 ministries surveyed, 1 information is reduced. ministry (Ministry of Labor and Social Welfare) and 9 The number of submitted SPIS formats that involve provinces have utilized SPIS formats to request national information that is different from that in development contribution budgets for ODA projects in 2010/12. partner project reports is reduced. Among the total of 144 ODA projects conducted at the 5 ministries, 18 projects were applied through using SPIS formats (12.5% ratio). Also among 200 projects conducted at 14 provinces, 51 (or 20%) used SPIS. The reason why SPIS was not used were; 1) inability to access to project information due to insufficient information management, 2) submission of SPIS not mentioned in the MPI guidelines 3, and, 3) unclear instructions on SPIS usage. The submission of SPIS started through development and diffusion during PCAP2, meaning that project owner organizations are still in the initial developing stages of usage. Currently, the information sources for completing SPIS are ODA project documents that project owners possess, which highly depends on their collection and management capabilities. If AMP becomes commonly shared, more accurate information will be incorporated into budget requests through SPIS. [Indicator 5] Increased number of projects are managed in the district levels. figure figure 360 projects of the FY2011/2012 in total are currently XX% of the total number of projects which are to be managed (except the project assessment and payment task) managed by the districts defined by regulations or by the districts in the six provinces and the Vientiane announcements is managed by the districts. Capital, target areas of baseline survey. figure should be decided upon consultation with the MPI after regulations or announcements are issued. Regulations or announcements that clarify the projects to be managed by the districts are not yet issued, therefore it is difficult to decide the target figure as of this moment. Furthermore, currently the number of projects managed by the districts and capacity of the districts vary depending on districts. Therefore, target figure should be decided upon consideration of contents of regulations or announcements and capacity of the districts after regulations or announcements are issued. 3 Comments obtained from baseline survey interviews. 14

21 3.2 Overall Goal Three indicators have been chosen for the Overall Goal, or Sector ministries, government organizations and provincial/district sector departments manage public investment projects based on the mid-term public investment framework under the NSEDP. The following charts explain the baseline and target indicators and the reasons behind them, and share any relevant remarks. [Indicator 1] The Mid-Term Public Investment Plan for is utilized by the Lao government in ministries, government organizations, provinces, and districts as the standard development budget planning and monitoring tool. A mid-term public investment plan does not exist. Each government organization formulates, implements, and monitors a mid-term public investment plan involving the following aspects: The plan follows the budget allocation announced by, or agreed upon with, MPI. The plan follows the instructions given by MPI concerning the management of debt. As stated in the Project Purpose indicator above, the Mid-Term Public Investment Plan is based on the assumption that financial evidence is clear, and that the government organizations are actively utilizing the plan as a monitoring tool. [Indicator 2] The capital expenditure is managed in a mid-term basis and its debt is seeing reduction. The following two figures are used as baseline; Achievement of target will be identified through positive Official debt as indicated in the 2011/12 Gazette. trend toward debt reduction by organization, rather than Payment duration calculated from the 2011/12 budget measuring the debt situation of a single year. list. Official debt figures indicated in the Ministry of Finance Gazette is known as the official debt for the GoL, although it does not indicate the true liabilities to contractors The Payment Duration formula, developed during PCAP2, shows the true liabilities that each organization has to bear. The formula for the payment duration is as follows; [Project Costs in total] [Amount paid] [Payment Duration] = [Annual Budget Allocation] Trend of both figures will be measured to study the achievement of this indicator. 15

22 [Indicator 3] Positive and continuous effects that are contributing to the achievement of the NSEDP targets are found in completed public investment projects that are completed, operated, and maintained as planned. Currently there are no systemized operations and maintenance plans, or means to measure positive impact of be measured through the following; Contribution of completed projects to the NSEDP target to projects. Positive impact of public investment projects are indicated in the evaluation report of the NSEDP Effects towards development plans are indicated in expost evaluation reports. Positive impact including ripple effect is found through interviews and surveys. Ex-post evaluation will be systemized through PCAP3 activities, and improvement of operations and maintenance will become an important criterion. Contribution towards SEDP targets will be determined through the evaluation. Evaluation reports of NSEDP will also be referred. It is analyzed whether public investment projects have contributed, or provide positive gain towards achievement of NSEDP targets. Through interviews and surveys to project owners and planning officials, positive effects of project(s) are also measured. The effect for this indicator is only shown after projects have confirmed operational effect through appropriate completion and maintenance. To show direct relevance to NSEDP, studies of the mid-term evaluation report for NSEDP , presumably completed around 2018, is essential. 16

23 3.3 Output 1 Three indicators have been set for Output 1, or A framework for Mid-Term Public Investment Plan and Financial Management Guidelines is established. Currently, MPI compiles the public investment list annually, but has never formulated a Mid-Term Public Investment Plan. PCAP2 stressed the importance of financial management and developed a tool to measure the financial situation of public investment projects in each province. Several training courses were conducted to disseminate such tool in provinces. However, MPI has not adopted any policies on financial management. The following tables explain the baseline and target indicators and the reasons for them. [Indicator 1] A draft Mid-Term Public Investment Plan is prepared in the pilot organizations. Mid-Term Public Investment Plan (with financial A Mid-Term Public Investment Plan management background) does not exist. incorporating PCAP3 methods is developed in pilot organizations. For this indicator, a Mid-Term Public Investment Plan and Financial Management Guidelines will be developed with the pilot organizations by January [Indicator 2] A draft Mid-Term Public Investment Financial Management Guidelines is prepared by the Ministry of Planning and Investment. No guidelines for have been developed. The Financial Management Guidelines for are prepared by MPI. For this indicator, PCAP3 and MPI will finalize the content of the Mid-Term Public Investment Plan and Financial Management Guidelines by December [Indicator 3] Methods to develop and monitor the Mid-Term Public Investment Plan and the Mid-Term Financial Management Guidelines are included in the manuals and handbooks. There are no descriptions on Mid-Term Public Investment Methods of formulating the Mid-Term Public Investment Plan in the current manual/handbooks. The concept of Plan and Financial Management Guidelines are included in Financial Management is included in the current manual and the manual/handbooks respectively. handbooks, but is not linked to official procedures. [Reasons/Remarks] For this indicator, PCAP3 will formulate manual/handbooks on the establishment process of the Mid-Term Public Investment Plan and Financial Management Guidelines for by June